The deduction of non-net loss in 2021 is slightly lower than we expected.
The company announced its 2021 results: a net profit loss of 4.164 billion yuan, mainly due to an one-time paper loss caused by the conversion of preferred shares into common shares when IPO was listed. Among them, the non-return net profit lost 533 million yuan, the loss decreased by 34% compared with the same period last year, and the loss was slightly less than we expected, mainly because the R & D expenditure was slightly lower than we expected.
Trend of development
Hepatitis B siRNA drugs show the potential of functional cure. At the American Society of Hepatology Annual meeting (AASLD) in November 2021, the phase 2 clinical results of the company's hepatitis B siRNA drug BRII-835 combined with PEG-IFN- α were excellent. We believe that this result shows the potential of BRII-835 in the functional cure of hepatitis B and will be the cornerstone product of combination in the future. The company is currently promoting the Phase 2 clinical trial (NCT04749368) with BRII-179 and BRII-835, and the company is expected to announce the top-line results of the phase 2 trial at 2H22. With the company's overall layout on the HBV pipeline and scientifically differentiated combination therapy, we expect it to provide a functional cure for HBV.
The new crown neutralizing antibody has been approved and put on the market in China. The new coronal neutralization antibody drug combination BRII-196/BRII-198 was approved by NMPA in December 2021, becoming the first COVID-19 specific drug approved to be listed in China, and was included in COVID-19 's diagnosis and treatment Plan (trial Ninth Edition). In addition, the overseas declaration of BRII-196/BRII-198 has progressed smoothly and the submission of EUA application materials has been completed. We believe that the company will complete the transformation of a biotech company from clinical phase to commercialization through the new crown neutralizing antibody, demonstrating the company's ability to develop, register and commercialize in both China and the United States.
Pay attention to the differential layout of the company. The company's management team is experienced, in addition to authorized introduction of products, the company is also gradually verifying its independent R & D capabilities. At present, there are many domestic enterprises in the field of oncology and autoimmunity, and the company is based on anti-infection and central nervous system, we think it is expected to achieve differential competition.
Profit forecast and valuation
We keep our revenue unchanged at 200 million yuan in 2022 and introduce 0 billion yuan in 2023 for the first time. As we raised the forecast of R & D investment in 2022, we reduced the net profit of 2022 from-198 million yuan to-405 million yuan, and introduced the net profit of-576 million yuan for the first time.
We use the DCF valuation method to value the company, maintain the outperform industry rating and maintain the target price of HK $15.95, which is 40.9% upside from the current share price.
Risk
The launch of new products, clinical trial data and sales are lower than expected; competition intensifies; the company's continued losses may affect product research and development and promotion.